The document discusses the challenges and opportunities in cost transformation for organizations, emphasizing the need for strategic alignment between cost reduction efforts and long-term growth. It highlights the importance of methodologies like Lean Six Sigma for managing complexity and ensuring effective project execution. Additionally, it argues against traditional cost-cutting measures and advocates for a disciplined approach to integrate change management and achieve sustainable improvements.

2. Accelerating Cost Transformation
Ritz Carlton, Mega Kuningan – February 3, 2010

3. Commonization of industry

4. Brighter 2010

5. 2010: Challenges and Opportunities
ASEAN-China Free Trade Agreement
Higher customer bargaining power
– Flatten world, More supply
Rising costs but limited pricing power due to
globalization and intensifying competition
Volatile energy prices
Reduced access to liquidity and expensive financing
Threat of global recession
Weak investor confidence

7. The Battle

8. Case: Airlines

9. What Can or Should We Do?
Translating Pressure into Competitive Advantage

10. Cost Transformation vs Future Growth
Organizations tend to cut cost all over for short
term without considering longer term growth
Tyranny of “or”
Impact:
– You survive,… for now. But, to bounce back?

11. Our Perspective on COST
Cost is everywhere
Cost tends to increase along with business
complexity
Good news is you can manage the complexity
Area with cost reduction opportunity is not always
obvious!
Cost-cutting measures will not only keep a business
running efficiently in a downturn, but also position
the company to take advantage of the market when it
eventually snaps back.

12. Our Perspective on COST
Obvious Cost
You are certain Obvious
eg: Defects and Errors
Suspected Cost Suspect
Doubtful -ed
Can we eliminate it?
Hidden
eg: transportation, discount?
Hidden Cost
You do not aware
Biggest portion of managing cost.

13. Approach to Cost Transformation
High
STRUC-
TURAL
PROCESS
Complexity
CHANGE
LOW
HANGING
FRUIT
Low
Low Length of Time High

14. Myths of Six Sigma
Myth #1: Runs well only in large companies
Myth #2: Only for manufacturing
Myth #3: You have to be a statistician to use it
Myth #4: It’s a big training investment with a long
payback period.
Myth #5: You have to be good in Karate

15. Lean and Six Sigma
Lean provides tools for quickly and significantly slashing
cycle time and waste in any process
Six Sigma provides tools and organizational guidelines that
establish a foundation for sustained, data-based
improvements in strategically important, customer-critical
targets.
LSS has grown beyond these problem-solving roots, it is a
deployment guidelines that give companies the means to
establish and maintain…
strategy-to-execution links.

16. Examples of LSS Projects/Subjects
PERFORMANCE MEASUREMENT
CLAIM PROCESS
PROCESSING COST
PRODUCTIVITY
CUSTOMER SATISFACTION
SERVICE QUALITY OPERATION CONTROL
DEFECT REDUCTION SPEED
PROCESS
DELIVERY PERFORMANCE
ENERGY COST
SERVICE LEVEL AGREEMENT
EFFICIENT PROCESS
HUMAN RESOURCES

17. Questions Are
• Are those projects will help you increase added value to
shareholders and stakeholders?
• Do we have infrastructure, process, and people to
identify and execute those initiatives?
• Do we have the skill-set and know-how to effectively
solve the issues?

18. Okay, Let’s Agree on What We Need
• Strategic Alignment and Integration between process
improvement, cost transformation, and strategy
– Selected and prioritized portfolio of initiatives (projects)
– Calibrated vision and business objectives, top down
• Proven Change Infrastructure (change management,
people, monitoring process)
– Skilled change agents with technical know how and people skills
– Power of Mass
• Disciplined Execution of initiatives/projects with
comprehensive skill set and methodology
– Robust factual-approach methodology
– Wave by wave by wave

19. Okay, Let’s Agree on What We Need
• Strategic alignment and integration between process
improvement, cost transformation, and strategy
– Selected andCommitment
prioritized portfolio of initiatives (projects)
– Calibrated vision and business objectives, top down
Strategy
• Proven Change Infrastructure (change management,
people, monitoring process) Calibrate
Infrastructure
– Skilled change agents with technical know Vision people skills
how and
– Power of Mass
• Discipline
Diciplined Execution of initiatives/projects
– Robust factual-approach methodology
Method
– Wave by wave by wave

20. Okay, Let’s Agree on What We Need
• Strategic alignment and integration between process
improvement, cost transformation, and strategy
LEAN SIX SIGMA
– Selected and prioritized portfolio of initiatives (projects)
– Calibrated vision and business objectives, top down
• Proven Change Infrastructure (change management,
people, monitoring process)
– Skilled change agents with technical know how and people skills
A• rose by any other of initiatives/projects as sweet!
– Power of Mass
Diciplined Execution
name would smell
But, it is not recommended to use: cost cutting
– Robust factual-approach methodology
– Wave by wave by wave

21. Prioritizing Projects
You can download the software for free:
http://www.SSCXinternational.com/projectselection.html
Instruction and explanations
are available on the website.
Long-List of
Potential CIProjects
Project
Queue

22. Structure of Training Programs
Executive and
Leadership
Black Belt
Green Belt
Awarenesss
Leadership and Change
Technical Side and Execution
Awareness and Understanding

23. Define
Measure
Analyze
Improve
Control
Sustain!

24. DMAIC Problem Solving Roadmap
Define Measure Analyze Improve Control
Well defined
problem is problem
half-solved.

25. DMAIC Problem Solving Roadmap
Define Measure Analyze Improve Control
Understand
issues by knowing
where they stand.

26. DMAIC Problem Solving Roadmap
Define Measure Analyze Improve Control
Y = f(x), analyze,
identify, and
prioritize xs.

27. DMAIC Problem Solving Roadmap
Define Measure Analyze Improve Control
Execute CHANGE,
ensure they are
statistically significant.

28. DMAIC Problem Solving Roadmap
Define Measure Analyze Improve Control
Sustain
improvement,
never let it slip.

29. Integrating Change Management

30. More on Change Management
Compelling Aligned Enduring Quick Wins Confusion,
Reason Infrastructure Capability and Stories Unmotivated
Clear and Aligned Enduring Quick Wins “Change is
Shared Vision Infrastructure Capability and Stories not a Priority”
Clear and Compelling Enduring Quick Wins Slow , Bumpy
Shared Vision Reason Capability and Stories Change
Clear and Compelling Aligned Quick Wins
Frustration
Shared Vision Reason Infrastructure and Stories
Clear and Compelling Aligned Enduring Losing
Shared Vision Reason Infrastructure Capability Enthusiasm
Clear and Compelling Aligned Enduring Quick Wins Succesful
Shared Vision Reason Infrastructure Capability and Stories CHANGE

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Mega Kuningan
Jakarta 12950
T +62 21 576 2727
F +62 21 576 2736
www.SSCXinternational.com